Cobalt Supply Chain Rebalancing: Strategic Opportunities Amid DRC Constraints and Indonesia's Rise

The global cobalt market is undergoing a seismic shift in 2025, driven by the Democratic Republic of Congo's (DRC) aggressive export quotas and Indonesia's rapid production expansion. These developments are reshaping supply dynamics, creating both risks and opportunities for investors. As the DRC tightens its grip on cobalt exports and Indonesia emerges as a critical alternative, the interplay of geopolitical strategy, industrial innovation, and market volatility demands a nuanced investment approach.

DRC's Export Quotas: A Strategic Power Play

The DRC, which accounts for 72% of global cobalt output in 2025, has implemented a quota system limiting annual exports to 96,600 metric tons for 2026 and 2027-less than half of its 2024 production. This move, announced in October 2025, has already driven cobalt hydroxide prices to $47,110 per metric ton in Q3 2025, a 69.9% surge year-on-year. The DRC's strategy is twofold: to stabilize global prices by curbing oversupply and to capture greater value from its mineral wealth by controlling downstream processing.

According to a report by S&P Global, the DRC's export restrictions have created a 10,700-metric-ton deficit in 2026, exacerbating supply chain bottlenecks for battery and EV manufacturers. The country's partnership with Chinese mining giants like Jinchuan Group and China Molybdenum Company (CMOC) further solidifies its dominance. Projects such as Musonoi and Kisanfu are expected to sustain output growth, ensuring the DRC remains the linchpin of global cobalt supply. However, the quota system's quarterly adjustments introduce volatility, requiring investors to monitor policy shifts closely.

Indonesia's Ascent: A Promising but Imperfect Alternative

Indonesia, the second-largest cobalt producer with a 14.9% global share in 2025, is rapidly scaling up production through high-pressure acid leach (HPAL) facilities and mixed hydroxide precipitate (MHP) processing. By 2027, its output is projected to reach 66,812 metric tons, up from 38,324 metric tons in 2025. Fastmarkets analysts predict Indonesian cobalt-in-MHP production could hit 67,500 metric tons in 2026, a 46,300-ton increase from 2025.

Yet, Indonesia's growth is not without hurdles. As highlighted by , its cobalt often requires more intensive refining due to lower purity compared to DRC-sourced material, complicating supply consistency for tech firms. Additionally, Indonesia's mandate for domestic downstream processing adds logistical complexity, raising concerns about traceability and ESG compliance. Despite these challenges, the country's strategic partnerships with the DRC- announced in a March 2025 cabinet meeting-signal a coordinated effort to manage global supply and pricing.

Geopolitical Alliances and Investment Opportunities

The DRC-Indonesia collaboration underscores a broader geopolitical strategy to counterbalance China's dominance in cobalt processing. For investors, this partnership opens avenues in both regions. In the DRC, joint ventures with CMOC and Jinchuan Group offer access to large-scale production and infrastructure development, such as the Musonoi and Kisanfu projects. These initiatives are critical for sustaining the DRC's output growth and mitigating short-term supply shocks from its quota system.

Indonesia, meanwhile, presents opportunities in HPAL facilities and MHP production, which are pivotal for downstream battery manufacturing in China and beyond. However, investors must weigh the risks of low refined nickel prices and logistical bottlenecks, which could delay Indonesia's projected output gains. The country's regulatory framework, which prioritizes domestic processing, also necessitates partnerships with local firms to navigate compliance challenges.

The Role of Recycling and Low-Cobalt Technologies

As the DRC's export constraints persist, recycling and low-cobalt battery technologies are gaining traction. Cobalt recovery rates from recyclable materials now exceed 95%, offering a partial offset to supply shortages. Meanwhile, companies like Tesla are accelerating the adoption of lithium-iron-phosphate (LFP) batteries, which contain no cobalt. While these trends may reduce long-term demand for primary cobalt, they also highlight the need for diversified investment portfolios that include recycling infrastructure and alternative battery chemistries.

Strategic Investment Outlook

The cobalt supply chain rebalancing presents a dual-edged opportunity. In the short term, the DRC's quotas will likely keep prices elevated, benefiting producers with secure access to its mines. However, the medium-term outlook hinges on Indonesia's ability to scale production and refine its output. Investors should prioritize companies with strong ties to both regions, such as CMOC and Jinchuan Group, while also hedging against market volatility through exposure to recycling technologies and low-cobalt battery innovators.

Geopolitical tensions and regulatory shifts will remain key variables. The DRC's quarterly quota adjustments and Indonesia's domestic processing mandates could introduce unexpected disruptions. Yet, for those who navigate these complexities with agility, the cobalt market's rebalancing offers a compelling case for strategic, long-term investment.